In his first veto since becoming Maine’s chief executive, Gov. Paul LePage on Thursday rejected a bill aimed at discouraging anti-competitive practices by health insurance companies. Similar laws have been passed in several other states, and for-profit Blue Cross and Blue Shield programs are under federal investigation for using anti-competitive language in their contracts with hospitals and other health care providers.
The Maine measure, LD 1222, garnered unanimous endorsement in the Maine House and Senate earlier this month, but in his veto statement LePage said it would hurt business practices here.
“Blanket ‘one-size-fits-all’ laws prevent businesses from pursuing novel and creative approaches to achieve competitive advantages,” LePage wrote. “New laws forcing requirements on business are not necessary to ensure that fair play occurs in Maine’s insurance marketplace.”
The bill, sponsored by Rep. Sharon Treat, D-Hallowell, would have prohibited the inclusion of “most favored nation” language in contracts between insurance companies and health care providers. Such clauses force providers to accept insurance payments that are lower than the agreed-upon rate if the provider accepts a lower rate from a different insurer.
Treat said Friday the use of such clauses primarily benefits profitable private insurance companies while undermining small private medical practices that lack the negotiating clout of larger groups affiliated with hospitals and health care systems.
The bill was supported by the Maine Medical Association and a number of independent physical therapists and other health care providers who spoke at the bill’s public hearing before the Insurance and Financial Services Committee. It was opposed by insurance companies, including for-profit Anthem Blue Cross and Blue Shield of Maine.
“I am mystified by the approach of this governor,” said Treat, whose liberal-leaning philosophy has been on a collision course with the governor’s more conservative policies this legislative session. “He continuously sides with big corporations versus small Maine businesses.”
Among those who testified in support of the bill was Robert McElwain, practice manager for the independent Northeast Neurosurgery in Bangor. On Friday, McElwain said one of Maine’s largest insurers had attempted to enter into a contract with the Bangor practice using the “most favored nation” language in the contract.
“Basically, they wanted to reserve the right to audit our records to ensure they are paying less than everybody else,” he said. That would have put Northeast Neurosurgery in violation of contracts with other insurers that prohibit the disclosing of reimbursement rates, McElwain said. The medical practice rejected that contract.
While insurers claim that the use of “most favored nation” language helps drive down costs in the health care system, critics, including the U.S. Department of Justice, say it may have the opposite effect, encouraging some institutions to artificially raise their contracted rates in order to maintain profits.
In an article published in March, the Wall Street Journal reported that federal investigations of Blue Cross and Blue Shield insurance programs are under way in six states and the District of Columbia for violations of anti-competitive statutes. The article quotes Christine Varney, head of the department’s antitrust division, as saying most favored nation clauses “affect health care delivery in a very fundamental way” and pledging to challenge “similar anti-competitive behavior anywhere else in the United States.”
LePage spokeswoman Adrienne Bennett said Friday that LePage had been counseled regarding the federal investigations before vetoing LD 1222.
Overriding the governor’s veto would require two-thirds votes in both the House and Senate.